Gas prices are going down. “This is definitely not the market reaction that Putin was aiming for,” tweeted an energy expert. Oil prices are also falling.
The price pressure on the energy markets is decreasing. Oil is now cheaper than it was before Russia’s war of aggression in Ukraine began. Gas prices are also falling significantly.
Gas prices shot up on Friday after Gazprom announced it would not resume supplies through the Baltic Sea pipeline Nord Stream 1 until further notice. Then it went down again.
Put in numbers, the announcement catapulted the price of European natural gas higher: the TTF futures contract for Dutch natural gas for delivery in October rose a whopping 30 percent. Then it crumbled off a bit and went out of business with a plus of 17 percent. Today the price was at times below Friday’s level. The TTF futures contract serves as a benchmark for the European price level on the natural gas market.
“That’s no guarantee that there won’t be a gas shortage in winter,” tweeted Janis Kluge, Russia expert at the German Science and Politics Foundation. “But it’s a relief in electricity and gas prices.” Currently, gas-fired power plants are also used to generate electricity. That drives the prices. “Things can change a lot in the next few days and weeks,” said Kluge. “But that’s definitely not the market reaction that [Russian President Vladimir] Putin was aiming for.”
Gazprom cited technical problems with the turbines manufactured by Siemens Energy as the reason for the delivery stop. But Putin spokesman Dmitry Peskov has now made it clear that the Kremlin is trying to force the West to lift sanctions. The deputy chairman of the Russian National Security Council, ex-President Dmitry Medvedev, justified the stop with “hostile behavior” by the federal government.
One reason for the fall in prices is likely to be the European Union’s possible response to an impending natural gas crisis. The European Commission is examining ways to cap gas prices. “I think it’s fair to say that [the pressure from] the indefinite closure of Nord Stream has evaporated,” tweeted energy economist Lion Hirt of the Hertie School.
Oil prices are also coming back. Yesterday, Monday, they had risen sharply after the Saudi Arabian-led oil cartel Opec and its allies such as Russia announced that they would cut production somewhat from October. Oil of the North Sea variety Brent as well as the US reference variety WTI became significantly cheaper today and cost significantly less than before the Russian invasion of Ukraine at the end of February. Oil prices fell for the third month in a row in August, the longest monthly loss streak since 2020. Analysts justify this with concerns about a global recession and falling demand.
